Sprint to pay $1.025bn to Clearwire for 4G services

20 апреля 2011

Sprint
Nextel Corp. and Clearwire Corp. said Tuesday that they had settled their
dispute over wholesale pricing, providing Clearwire with badly needed cash in a
new agreement. Sprint will
pay a minimum of $1.025 billion over the next two years to use Clearwire's
super-fast wireless service.

The
agreement between Sprint and Clearwire brings clarity to their relationship and
allows them to push forward with their respective 4G strategies. The deal comes
as competitors such as Verizon Wireless begin to tout their own speedy wireless
services. For Clearwire, the deal provides a steady flow of cash to be used in
its network rollout as the company continues to seek financing. Verizon
Wireless is a joint venture of Verizon Communications Inc. and Vodafone Group
PLC.

"This
provides us with the capital to operate efficiently over the next couple of
years," Clearwire interim Chief Executive John Stanton said in an
interview."It allows us to plan for our expansion."

He added
that the agreement reaffirms the companies' relationship, as well as the
strength of the combined spectrum position.

Despite the
deal, Clearwire continues to face a cash-crunch which impairs its future ability
to invest in its network.

"There
are still issues that need to be resolved," said Walter Piecyk, an analyst
at BTIG Research."At some point during this process, money will have to
show up."

Interim CEO
Stanton acknowledged that the company would need additional financing if it
wants to use a second variation of 4G technology more widely adopted by the
wireless industry.

"We're
working on that," he said, adding he believes there is interest from
Sprint and Clearwire's other shareholders, including cable companies, Intel
Corp. and Google Inc.

Sprint and
Clearwire's dispute revolved around the wholesale agreement in which Sprint
customers ride on Clearwire's network when using 4G smartphones such as the HTC
Corp.'s Evo 4G and Samsung Electronics Co.'s Epic. Sprint is by far Clearwire's
largest customer and majority shareholder, with a 54% stake in the company.

The
disagreement, which began in October, bogged down the companies, preventing
them from focusing on more pressing matters such as a possible cash infusion to
Clearwire or an outright purchase of the company, or a possible network-sharing
agreement. Sprint, meanwhile, is readying its own 4G plan independent of
Clearwire. Sprint CEO Dan Hesse previously said he needed to set the wholesale
terms with Clearwire before looking at future deals with Clearwire.

Stanton
declined to comment on whether he was in discussions with Sprint on a potential
acquisition. But he added that Clearwire's spectrum position will be crucial to
Sprint's own 4G plans.

Sprint will
pay Clearwire $300 million this year, and $550 million in 2012 for access to
its 4G network. Sprint also committed another $175 million for additional use
for the next two years and beyond. The figures represent a minimum commitment;
Sprint will pay more if data usage continues to grow.

The regular
payments are designed to provide Clearwire with additional financial
flexibility as it continues to roll out its 4G network across the country.

The
agreement likely frees up Clearwire to strike similar deals with other
potential customers.

"While
Clearwire was negotiating with Sprint, they were probably hamstrung in
negotiations with other carriers," Piecyk said.